Company registration number 00740635 (England and Wales)
STONEGATE FARMERS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 OCTOBER 2022
STONEGATE FARMERS LIMITED
COMPANY INFORMATION
Director
Mr A D Gott
Company number
00740635
Registered office
Lacock Green
Corsham Road
Lacock
Chippenham
SN15 2LZ
Auditor
MHA Moore and Smalley
Richard House
9 Winckley Square
Preston
PR1 3HP
STONEGATE FARMERS LIMITED
CONTENTS
Page
Strategic report
1 - 5
Director's report
6 - 7
Director's responsibilities statement
8
Independent auditor's report
9 - 11
Statement of comprehensive income
12
Balance sheet
13
Statement of changes in equity
14
Notes to the financial statements
15 - 37
STONEGATE FARMERS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 1 OCTOBER 2022
- 1 -
The director presents the strategic report for the year ended 1 October 2022.
Principal activity
The principal activity of the company is the packing and marketing of free range & organic eggs and egg products. The company contracts with a substantial number of Group and independent farmers to collect and process eggs produced on their farms. The egg is processed and packed by the company and supplied to retail and trade customers.
Fair review of the business
The company experienced turnover growth of 17% in the period to £120.2m (2021: £102.5m). Operating profit was £0.8m (2021: £1.5m) reflecting the impact of surplus supply of egg in the first half of the year and inflationary pressures particularly from the impact of the Russia-Ukraine war. Despite these headwinds mitigation plans were implemented to bolster gross profit and that allowed the business to continue investing for the future and exited the year in a strong position for the year ahead. The director considers the company to be in a strong financial position given net assets of £15.1m as at 1 October 2022 (2021: £14.1m).
Post year end management accounts to April 2023 show the group the company is part of had available cash of £7.9m.
The company will continue to strengthen the business through development and evolution of high-quality core products focussed on our customers’ needs. Investment will continue in equipment and technology at the primary packing site.
During the year, the company has continued to invest in its grading capability along with its associated warehousing. The company has also continued to invest in its new egg processing facility to provide customers and consumers with a wider range of products to meet their requirements.
The company continues to support and invest in its supply chain focusing on providing a competitive, sustainable model for the long term. Within the competitive marketplace in which we operate, we face the constant challenge of being both adaptive and reactive to market price changes such as feed prices.
Throughout the year, the company has continued to invest in staff at all levels which we believe to be important, not least for the productivity gains that result.
STONEGATE FARMERS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 2 -
Principal risks and uncertainties
We have a long and strong relationship with our customers, working together to ensure the end consumer demands, both now and in the future, can be met and often exceeded. We continue to monitor market trends across egg type and size to ensure we have the right mix to meet customer demand.
Raw Material
The volatility of commodity prices, particularly wheat, is a constant challenge for the company. In addition to reviewing the market trends we work with both our suppliers and customers to minimise the impact to any one party.
Supply Risk
The risk to supply of egg has increased in the year with the impact of the Russia-Ukraine war on costs, and the increasing impact of Avian Influenza on the UK laying flock. Producers have felt cost increases in all aspects of their business, encompassing feed, energy, labour, transportation and in respect of new investment cost of materials and cost to raise finance. These have all compounded to impact the willingness of producers to invest in new infrastructure to house new free range or organic flocks, and with the impending move away from caged egg by retailers this is putting pressure on the supply of egg. The impact of Avian Influenza on the UK laying flock has added extra pressure to supply.
The company works closely with its producer base and is proactive in passing through price increases in partnership with our strategic retailers to ensure our supply base has a viable business to continue as long term partners to us and our retailers.
The company holds our own farms and those of our producers to the highest standards of bio-security to mitigate the risk of Avian Influenza. The company has insurance in place specifically against the risk of our own farms being directly impacted by Avian Influenza.
Health & Safety risk
Employee safety remains paramount in our day-to-day activities. The company ensures that regular, thorough reviews of the workplace are carried out with any relevant actions taken to provide a safe working environment for all our employees. In addition to our own reviews the company engages with third parties to provide an independent review.
Cash flow risk
The company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the company by monitoring levels of debt finance and related finance costs. The company does not use derivative financial instruments to manage interest rate costs and as such, no hedge accounting is applied.
Given the size of the company, the director has not delegated the responsibility of monitoring financial risk management to a sub-committee of the Senior management team. The policies set by the Senior management team are implemented by the company's finance department.
The director will revisit the appropriateness of this policy should the company's operations change in size or nature.
STONEGATE FARMERS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 3 -
Principal risks and uncertainties (continued)
Credit risk
The company's principal financial assets are bank balances and cash, trade and other receivables, and investments.
The company's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.
Trade debtors are managed in respect of credit and cash flow by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company uses a mixture of longer-term asset finance and short-term debt finance.
Market Risk
The company recognises the risk of competition in a highly active market. Through investment in our products, genetics, facilities and people we aim to meet or exceed the demands of our customers and the consumer. Being a 100% free range and organic operation, and so having long removed ourselves from caged and barn egg production, the business is less at risk from consumer and retail pressure against intensive egg production associated with lower welfare standards.
The UK's exit from the EU
While the director can't predict what the longer-term impact of the UK's exit from the EU will be, the senior management team will continue to monitor the position and its potential impact on our business. The business benefits from 100% of its egg coming from UK farms and very little egg being sold outside the UK.
Russia-Ukraine war
The invasion of Ukraine by Russia in February 2022 created significant uncertainty in many commodity markets, most notably feed, fuel and energy costs. Where forward positions have been taken the company is protected from that cover in the short to medium term. Costs that are exposed to the current market volatility are being managed pro-actively through sympathetic engagement with our strategic suppliers and customers. The company remains confident of its ability to appropriately manage the short to medium term volatility being generated by the conflict in Ukraine.
Key performance indicators
Given the straightforward nature of the company's operations, the director is of the opinion that analysis using KPIs other than the financial results, is not necessary for an understanding of the development, performance or position of the business.
STONEGATE FARMERS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 4 -
Health, safety and environment
The key focus of the business continues to be health, safety, quality and the environment.
Our policies aim to provide and support a culture where health, safety, quality and the environment are consistently on our agenda. This has been achieved by ensuring that our team receive adequate training and feel empowered to raise any concerns that they may have.
From the Food Quality Management System perspective, we are accredited against the British Retail Consortium (Global Food Safety Initiative) rather than following ISO9001. Our current BRC grade is AA* for shell egg and A* for the convenience foods sites. The scope of these accreditations is as follows:
Shell Egg
Grading and packing, of hen, goose, ostrich, pheasant, quail, duck, emu, turkey, rhea and guinea fowl eggs. Packing into pulp or plastic cartons.
Convenience Foods
The cooking (boiling) cooling, shelling of hen and quails eggs, the blending of sandwich fillings, the assembly of hen and quail eggs with and without value-added components or brine into MAP, Non-MAP, bulk buckets and bags. The poaching, pasteurisation and brining of eggs packed into plastic film lidded trays. The breaking, pasteurisation of liquid egg with and without additions pre and post pasteurisation, packed into bags, retail cartons and pouches. The filling of Raw egg whites into bags.
Both Sites are also accredited against the BEIC (British Egg Industry Council) Lion Code, RSPCA (Royal Society for The Prevention of Cruelty to Animals) and Organic Food Standards with both Organic Farmers and Growers and Soil Association.
Stonegate Farmers are also member of Campden BRI Food Research Organisation and the Chilled Foods Association.
S172 statement
This statement by the director describes how the responsibilities under s172 (1) (a) to (f) of the Companies Act 2006 have been approached.
The director:
considers having acted in good faith to promote the success of the company on behalf of the employees, clients and suppliers of the business in relation to matters set out in s172.
monitors and reviews strategic objectives against growth plans, and regular reviews at departmental and senior management team level are held across the business in the key areas being H&S, Financial performance, Operations, Human Resources and Risks and Opportunities.
considers H&S fundamental to the management of the business. Safe working practices that minimise environmental impact are key to the success of the business and vitally important for our stakeholders, the communities, and the environments we work in.
recognises and understands that it is important to keep employees informed of all matters concerning them and does this in several ways including site notices, meetings, verbal and written communications. The views and interests of employees are considered in consultation with them through working groups or forums, which evolve over time to meet the needs of all parties. The policy of the company is to consult and discuss with employees any issues that arise in accordance with relevant procedures or legislation.
STONEGATE FARMERS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 5 -
The fundamental principle in the governance of Stonegate Farmers is the clear, fair and trusting approach to all interactions with employees, clients and suppliers; this is reflected in the length of service of employees and management teams and the longevity of the relationships with our clients and suppliers.
The company's employees, clients and suppliers are critical to the success of the business and so it is recognised that engagement is an important aspect in those relationships.
The company has an equal opportunities policy and is committed to the principles within the policy in respect of all stakeholders.
The company has built, and continues to grow, the business on a reputation for delivering excellent customer service. The company, through the senior management team and employees, strives continuously to improve in every aspect of the products and services it provides, for the mutual benefit of all stakeholders.
The director, supported by the senior management team, has overall responsibility for delivering the company's strategy and values and for ensuring high standards of governance. The primary aim of the director is to promote the long-term sustainable success of the company to generate benefit for the stakeholders.
Mr A D Gott
Director
15 June 2023
STONEGATE FARMERS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 1 OCTOBER 2022
- 6 -
The director presents his annual report and financial statements for the year ended 1 October 2022.
Principal activities
The principal activity of the company is the packing and marketing of free range & organic eggs and egg products. The company contracts with a substantial number of Group and independent farmers to collect and process eggs produced on their farms. The egg is processed and packed by the company and supplied to retail and trade customers.
Results and dividends
The results for the year are set out on page 12.
Ordinary dividends were paid amounting to £152,400. The director does not recommend payment of a further dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr A D Gott
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The director recognises that the future success of the business is highly dependent upon the loyalty, skills and motivation of company's employees and, therefore, encourages the supply of information on the progress of their business unit and the company as a whole. Employee participation in improving the efficiency of the business is actively sought at all levels through regular meetings. The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
Future developments
The company will continue to strengthen the business through development and evolution of high-quality core products focussed on our customers’ needs. Investment will continue in equipment and technology at the primary packing site and new egg processing facility.
Auditor
The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
STONEGATE FARMERS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 7 -
Energy and carbon report
The company is not required to report its carbon emissions and energy use data because this information is disclosed, on a consolidated basis, in the financial statements of Stonegate Food Group Limited. Copies of these financial statements can be obtained from its registered office, Lacock Green, Corsham Road, Lacock, Chippenham, Wiltshire, SN15 2LZ.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of financial risk management objectives and policies.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr A D Gott
Director
15 June 2023
STONEGATE FARMERS LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 1 OCTOBER 2022
- 8 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
STONEGATE FARMERS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF STONEGATE FARMERS LIMITED
- 9 -
Opinion
We have audited the financial statements of Stonegate Farmers Limited (the 'company') for the year ended 1 October 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 1 October 2022 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
STONEGATE FARMERS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF STONEGATE FARMERS LIMITED
- 10 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, are detailed below:
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations;
Enquires with management about any known or suspected instances of fraud;
Review of minutes of meetings of management;
Examination of journal entries and other adjustments to test for appropriateness and identify any instances of management override of controls;
Review of legal and professional expenditure to identify any evidence of ongoing litigation or enquiries;
Auditing the risk of fraud in revenue, including through the testing of income cut off at the period end and through sales transaction testing to provide comfort that revenue is completely stated in the financial statements.
STONEGATE FARMERS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF STONEGATE FARMERS LIMITED
- 11 -
We identified the following areas as those most likely to have a material impact on the financial statements: employment law, health and safety legislation, food hygiene and safety regulations, and compliance with the UK Companies Act.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognize the non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Joe Sullivan (Senior Statutory Auditor)
For and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Richard House
9 Winckley Square
Preston
PR1 3HP
20 June 2023
STONEGATE FARMERS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 1 OCTOBER 2022
- 12 -
52 weeks
53 weeks
ended 1
ended 2
October
October
2022
2021
Notes
£
£
Turnover
3
120,219,511
102,531,875
Cost of sales
(107,981,994)
(95,317,718)
Gross profit
12,237,517
7,214,157
Administrative expenses
(27,301,373)
(15,803,688)
Other operating income
15,835,972
10,116,318
Operating profit
4
772,116
1,526,787
Interest receivable and similar income
7
967
562
Interest payable and similar expenses
8
(393,764)
(234,250)
Profit before taxation
379,319
1,293,099
Tax on profit
9
(37,017)
(496,084)
Profit for the financial year
342,302
797,015
Other comprehensive income
Actuarial gain on defined benefit pension schemes
945,000
1,526,000
Tax relating to other comprehensive income
(179,550)
(289,940)
Total comprehensive income for the year
1,107,752
2,033,075
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
STONEGATE FARMERS LIMITED
BALANCE SHEET
AS AT
1 OCTOBER 2022
01 October 2022
- 13 -
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
11
79,975
115,259
Tangible assets
12
11,687,610
11,204,105
Investments
13
6,069
6,069
11,773,654
11,325,433
Current assets
Stocks
15
1,583,951
1,291,089
Debtors
16
33,026,553
25,013,920
Cash at bank and in hand
230,969
877,965
34,841,473
27,182,974
Creditors: amounts falling due within one year
17
(27,483,284)
(18,503,875)
Net current assets
7,358,189
8,679,099
Total assets less current liabilities
19,131,843
20,004,532
Creditors: amounts falling due after more than one year
18
(3,035,560)
(3,943,168)
Provisions for liabilities
Deferred tax liability
22
1,028,461
811,894
Defined benefit pension liability
24
1,137,000
(1,028,461)
(1,948,894)
Net assets
15,067,822
14,112,470
Capital and reserves
Called up share capital
23
1,000
1,000
Profit and loss reserves
15,066,822
14,111,470
Total equity
15,067,822
14,112,470
The financial statements were approved and signed by the director and authorised for issue on 15 June 2023
Mr A D Gott
Director
Company Registration No. 00740635
STONEGATE FARMERS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 1 OCTOBER 2022
- 14 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 27 September 2020
1,000
12,218,195
12,219,195
Year ended 2 October 2021:
Profit for the year
-
797,015
797,015
Other comprehensive income:
Actuarial gains on defined benefit plans
-
1,526,000
1,526,000
Tax relating to other comprehensive income
-
(289,940)
(289,940)
Total comprehensive income for the year
2,033,075
2,033,075
Dividends
10
-
(139,800)
(139,800)
Balance at 2 October 2021
1,000
14,111,470
14,112,470
Year ended 1 October 2022:
Profit for the year
-
342,302
342,302
Other comprehensive income:
Actuarial gains on defined benefit plans
-
945,000
945,000
Tax relating to other comprehensive income
-
(179,550)
(179,550)
Total comprehensive income for the year
-
1,107,752
1,107,752
Dividends
10
-
(152,400)
(152,400)
Balance at 1 October 2022
1,000
15,066,822
15,067,822
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 1 OCTOBER 2022
- 15 -
1
Accounting policies
Company information
Stonegate Farmers Limited is a private company limited by shares incorporated in England and Wales. The registered office is Lacock Green, Corsham Road, Lacock, Chippenham, SN15 2LZ.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts, as it is included in the consolidated accounts of a larger group. The financial statements present information about the company as an individual entity and not about its group. The results of the company are included in the consolidated financial statements of Stonegate Food Group Limited, registered office Lacock Green, Corsham Road, Lacock, Chippenham, Wiltshire, SN15 2LZ.
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
1
Accounting policies
(Continued)
- 16 -
1.2
Going concern
Inflationary pressures from the impact of the Russia-Ukraine war had a significant impact on many businesses in 2022 with food producers no less severely impacted than other sectors. The director believes that the company is well placed to minimise any impact.true
Management are continuously assessing the impact of inflationary pressures on customers and the supply chain with regular contact taking place throughout the supply chain to minimise any disruption. Where forward positions have been taken the company is protected from that cover in the short to medium term. Costs that are exposed to the current market volatility are being managed pro-actively through sympathetic engagement with our strategic suppliers and customers. The company remains confident of its ability to appropriately manage the short to medium term volatility being generated by the conflict in Ukraine. Actions have also been taken in the past to enable the business to establish a strong financial platform, and this together with the current balance sheet strength positions the company well. Cash flow projections have been prepared for the company to cover at least twelve months following the approval of the financial statements, which indicate that the company will generate sufficient resources to meet their obligations as they fall due. Post year end management accounts to April 2023 show the group the company is part of had available cash of £7.9m.
After considering the impact of the above, at the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for the sale of goods provided in the normal course of business, and is shown net of VAT. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Software
20% to 33% per annum
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Once assets are brought into use, depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
Land not depreciated, buildings 2% per annum
Plant and machinery
10% to 33% per annum
Motor vehicles
17% to 25% per annum
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
1
Accounting policies
(Continued)
- 17 -
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
1
Accounting policies
(Continued)
- 18 -
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
All of the company's assets are basic financial assets.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
1
Accounting policies
(Continued)
- 19 -
Basic financial liabilities
Basic financial liabilities, including creditors, and loans from fellow group that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
All of the company's liabilities are basic financial liabilities.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
1
Accounting policies
(Continued)
- 20 -
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The cost of providing benefits under defined benefit plans is determined separately for each plan using the projected unit credit method, and is based on actuarial advice.
The change in the net defined benefit balance arising from employee service during the year is recognised as an employee cost. The cost of plan introductions, benefit changes, settlements and curtailments are recognised as an expense in measuring profit or loss in the period in which they arise.
The net interest element is determined by multiplying the net defined benefit balance by the discount rate, taking into account any changes in the net defined benefit balance during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.
Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit balance excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.
The net defined benefit pension balance in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.
1.15
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
1
Accounting policies
(Continued)
- 21 -
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Impairment of trade debtors
At each balance sheet date, management undertake an assessment of the recoverability of trade debtors based upon their knowledge of the customers, ageing of the balances outstanding and previous write off history. Where necessary, an impairment is recorded as a doubtful debt.
The actual level of debt collected may differ from the estimated level of recovery.
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
2
Judgements and key sources of estimation uncertainty
(Continued)
- 22 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Accruals and provisions
At each balance sheet date, management undertake an assessment of the costs which have not yet been invoiced based upon their contractual arrangements and include appropriate provisions for these costs.
Pension and other post-employment benefits
The company has an obligation to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend upon a number of factors, including; Life expectancy, salary increases, asset valuations and inflation.
The director estimates these factors in determining the pension obligation at the balance sheet date. The assumptions reflect historic experience and current trends. Refer to the notes to the accounts for disclosures relating to the defined benefit pension schemes.
In order to assist in adhering to the criteria of FRS102, Section 28 'Employee benefits', the director uses the services of an independent external Actuary, who possess all relevant professional qualifications to deliver the calculations of the defined benefit schemes' balance as at the reporting date.
The director believes that this approach minimises any estimation uncertainty to an acceptable level.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Attributable to the principal activity
120,219,511
102,531,875
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
120,219,511
102,531,875
2022
2021
£
£
Other revenue
Interest income
967
562
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 23 -
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Depreciation of owned tangible fixed assets
448,682
372,671
Depreciation of tangible fixed assets held under finance leases
820,256
662,897
Profit on disposal of tangible fixed assets
(8,000)
(18,358)
Amortisation of intangible assets
35,284
35,963
Operating lease charges
1,580,762
1,256,839
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
25,500
23,950
For other services
Taxation compliance services
9,550
8,975
Other taxation services
7,850
17,000
All other non-audit services
4,150
3,900
21,550
29,875
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Production
223
171
Sales and distribution
106
88
Administration
73
66
Total
402
325
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
6
Employees
(Continued)
- 24 -
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
15,764,988
10,667,941
Social security costs
1,328,402
928,759
Pension costs
334,364
323,954
17,427,754
11,920,654
7
Interest receivable and similar income
2022
2021
£
£
Interest income
Other interest income
967
562
8
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
61,776
48,787
Other interest on financial liabilities
173,607
57,759
Interest on finance leases and hire purchase contracts
133,381
79,704
Net interest on the net defined benefit balance
25,000
48,000
393,764
234,250
9
Taxation
2022
2021
£
£
Deferred tax
Origination and reversal of timing differences
62,053
263,293
Changes in tax rates
19,596
195,735
Adjustment in respect of prior periods
(44,632)
37,056
Total deferred tax
37,017
496,084
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
9
Taxation
(Continued)
- 25 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
379,319
1,293,099
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
72,071
245,689
Tax effect of expenses that are not deductible in determining taxable profit
18,633
18,750
Effect of change in corporation tax rate
19,596
195,735
Group relief
45,246
176,052
Research and development tax credit
(68,102)
Other permanent differences
(73,897)
(109,096)
Deferred tax adjustments in respect of prior years
(44,632)
37,056
Taxation charge for the year
37,017
496,084
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
2022
2021
£
£
Deferred tax arising on:
Actuarial differences recognised as other comprehensive income
179,550
289,940
Factors affecting future tax and charges
In March 2021 the Chancellor confirmed, in the budget, an increase in the corporation tax rate from 19% to 25%. The Finance Bill 2021 had its third reading on 24 May 2021 and became substantively enacted. There were announcements to the contrary in the mini-budget of October 2022, but these announcements have since been reversed and so the new rate of 25% remains substantively enacted. Therefore, the timing differences expected to reverse on or after 1 April 2023 have been accounted for at 25% and therefore deferred tax has been provided for at 25% (2021: 25%).
10
Dividends
2022
2021
£
£
Final paid
152,400
139,800
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 26 -
11
Intangible fixed assets
Software
£
Cost
At 3 October 2021 and 1 October 2022
190,013
Amortisation and impairment
At 3 October 2021
74,754
Amortisation charged for the year
35,284
At 1 October 2022
110,038
Carrying amount
At 1 October 2022
79,975
At 2 October 2021
115,259
12
Tangible fixed assets
Freehold land and buildings
Plant and machinery
Motor vehicles
Total
£
£
£
£
Cost
At 3 October 2021
904,446
14,925,174
322,636
16,152,256
Additions
1,734,222
18,221
1,752,443
Disposals
(60,000)
(60,000)
At 1 October 2022
904,446
16,659,396
280,857
17,844,699
Depreciation and impairment
At 3 October 2021
904,446
3,781,178
262,527
4,948,151
Depreciation charged in the year
1,227,509
41,429
1,268,938
Eliminated in respect of disposals
(60,000)
(60,000)
At 1 October 2022
904,446
5,008,687
243,956
6,157,089
Carrying amount
At 1 October 2022
11,650,709
36,901
11,687,610
At 2 October 2021
11,143,996
60,109
11,204,105
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
12
Tangible fixed assets
(Continued)
- 27 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2022
2021
£
£
Plant and machinery
5,598,448
5,997,439
Motor vehicles
11,835
31,248
5,610,283
6,028,687
13
Fixed asset investments
2022
2021
£
£
Unlisted investments
6,069
6,069
Movements in fixed asset investments
Investments other than loans
£
Cost
At 3 October 2021 & 1 October 2022
6,069
Carrying amount
At 1 October 2022
6,069
At 2 October 2021
6,069
14
Subsidiaries
These financial statements are separate company financial statements for Stonegate Farmers Limited.
Details of the company's significant subsidiaries at 1 October 2022 are as follows:
Name of undertaking
Address
Class of
% Held
shares held
Direct
Indirect
Stonegate Agriculture Limited
1
Ordinary
100.00
-
Thames Valley Eggs (Production) Limited
1
Ordinary
0
100.00
Registered office addresses (all UK unless otherwise indicated):
1
Lacock Green, Corsham Road, Lacock, Chippenham, Wiltshire, SN15 2LZ
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 28 -
15
Stocks
2022
2021
£
£
Eggs, egg products and packaging
1,583,951
1,291,089
16
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
13,971,554
7,679,737
Amounts owed by group undertakings
14,732,938
14,670,856
Other debtors
1,173,819
2,014,142
Prepayments and accrued income
1,646,801
649,185
31,525,112
25,013,920
2022
2021
Amounts falling due after more than one year:
£
£
Prepayments and accrued income
1,501,441
Total debtors
33,026,553
25,013,920
17
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Obligations under finance leases
20
1,181,542
1,124,408
Other loans
19
8,973,421
3,750,052
Trade creditors
8,691,611
6,780,306
Amounts due to group undertakings
3,924,208
2,304,193
Other taxation and social security
380,562
271,169
Other creditors
136,182
131,396
Accruals and deferred income
4,195,758
4,142,351
27,483,284
18,503,875
18
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Obligations under finance leases
20
3,035,560
3,943,168
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 29 -
19
Loans and overdrafts
2022
2021
£
£
Other loans
8,973,421
3,750,052
Payable within one year
8,973,421
3,750,052
The company meets its day-to-day working capital requirements through an invoice discounting facility (shown as other loans above), which is secured by a debenture over the assets of the company. The invoice discounting facility is repayable on demand.
20
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
1,181,542
1,124,408
In two to five years
3,028,727
3,568,676
In over five years
6,833
374,492
4,217,102
5,067,576
Finance lease payments represent rentals payable by the company for certain items of plant and machinery held under hire purchase. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The creditor is secured on the assets to which it relates.
21
Provisions for liabilities
2022
2021
Notes
£
£
Deferred tax liabilities
22
1,028,461
811,894
Retirement benefit obligations
24, 25
1,137,000
1,028,461
1,948,894
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 30 -
22
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
1,555,597
1,255,751
Tax losses
(521,076)
(146,231)
Retirement benefit obligations
-
(284,250)
Short-term timing differences
(6,060)
(13,376)
1,028,461
811,894
2022
Movements in the year:
£
Liability at 3 October 2021
811,894
Charge to profit or loss
37,017
Charge to other comprehensive income
179,550
Liability at 1 October 2022
1,028,461
As at 2 October 2021 it was impractical to estimate the movement of the deferred tax asset relating to retirement obligations in the 12 months following the balance sheet date, due to the estimation uncertainty over the related obligations, which can only be assessed following the next balance sheet date. Furthermore as at the signing date of these financial statements, the company has not finalised its capital expenditure programme for the forthcoming year, and therefore an assessment as to the likely movement of the related timing differences cannot be made.
23
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,000
1,000
1,000
1,000
24
Retirement benefit schemes
Defined contribution schemes
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The charge to profit or loss in respect of defined contribution schemes was £334,364 (2021: £323,954).
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
24
Retirement benefit schemes
(Continued)
- 31 -
Defined benefit schemes
The company operates pension arrangements providing benefits based on final pensionable salary for its employees. The assets in each of the schemes are held separately from those of the companies being invested by professional investment managers. There are two partly funded defined benefit schemes for which the company is responsible: the Stonegate Farmers Limited Scheme and the Thames Valley Eggs Limited Scheme.
The total net pension liability recognised at the year end is £nil (2021: £1,137,000). This comprises a net liability of £nil (2021: £948,000) for the Stonegate Farmers Limited Scheme, and a net liability of £nil (2021: £189,000) for the Thames Valley Eggs Limited Scheme.
The company has not recognised a pension scheme asset at the balance sheet date as it cannot demonstrate that it would likely benefit from either qualifying criteria as stated in FRS102 section 28.22, namely that it cannot recover the surplus either through reduced future contributions or through refunds from the defined pension plan. As a consequence a restriction on the scheme surplus of £351,000 has been recognised for the Stonegate Farmers Limited Scheme, and a restriction on the scheme surplus of £644,000 has been recognised for the Thames Valley Eggs Limited Scheme, such that each scheme surplus is recognised at a balance of £Nil within the balance sheet at 1 October 2022.
Further analysis for each scheme is provided below.
Stonegate Farmers Limited Scheme
The Stonegate Farmers Limited Scheme was paid up with no further accrual of future benefits with effect from 30 September 2001.
An actuarial valuation of Stonegate Farmers Limited Scheme as at 1 October 2019 showed a funding shortfall of £472,000. To eliminate the shortfall the Trustees and the Employer agreed:
Annual contributions of £222,000 per annum from 1 October 2019 to 30 September 2020;
Annual contributions of £55,000 per annum from 1 October 2020 to 31 March 2024.
The last actuarial valuation of the Stonegate Farmers Limited Scheme was as at 1 October 2019. The report has been updated to take accounts of the requirements of FRS 102 in order to assess the scheme deficit at 1 October 2022.
Thames Valley Eggs Limited Scheme
The Thames Valley Eggs Limited Scheme was paid up with no further accrual of future benefits with effect from 1 October 2008.
An actuarial valuation of the Thames Valley Eggs Limited Scheme as at 1 October 2019 showed a funding shortfall of £1.008 million. To eliminate the shortfall the Trustees and the Employer agreed:
Annual contributions of £225,000 per annum from 1 October 2019 to 30 September 2020;
Annual contributions of £162,000 per annum from 1 October 2020 to 31 March 2025.
The last actuarial valuation of the Thames Valley Eggs Limited Scheme was as at 1 October 2019. The report has been updated to take accounts of the requirements of FRS 102 in order to assess the scheme deficit at 1 October 2022.
In respect of the Stonegate Farmers Limited Scheme the major assumptions used by the actuary for FRS 102 purposes were:
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
24
Retirement benefit schemes
(Continued)
- 32 -
2022
2021
Key assumptions
%
%
Discount rate
5.70
2.20
Expected rate of increase of pensions in payment
5.00
5.00
CPI inflation
3.50
2.70
Expected return on plan assets
2.20
1.70
Mortality assumptions
2022
2021
Assumed life expectations on retirement at age 65:
Years
Years
Retiring today
- Males
21.6
21.6
- Females
23.7
23.6
2022
2021
Amounts recognised in the profit and loss account
£
£
Net interest on defined benefit liability/(asset)
21,000
30,000
2022
2021
Amounts taken to other comprehensive income
£
£
Return on scheme assets excluding interest income
416,000
(537,000)
Actuarial changes related to obligations
(1,681,000)
(249,000)
Effect of changes in the amount of surplus that is not recoverable
351,000
-
Total costs/(income)
(914,000)
(786,000)
The amounts included in the balance sheet arising from the company's obligations in respect of defined benefit plans are as follows:
2022
2021
£
£
Present value of defined benefit obligations
2,987,000
4,696,000
Fair value of plan assets
(3,338,000)
(3,748,000)
(Surplus)/deficit in scheme
(351,000)
948,000
Restriction on scheme assets
351,000
-
Total liability recognised
-
948,000
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
24
Retirement benefit schemes
(Continued)
- 33 -
2022
Movements in the present value of defined benefit obligations
£
Liabilities at 3 October 2021
4,696,000
Benefits paid
(130,000)
Actuarial gains and losses
(1,681,000)
Interest cost
102,000
At 1 October 2022
2,987,000
The defined benefit obligations arise from plans which are wholly or partly funded.
2022
Movements in the fair value of plan assets
£
Fair value of assets at 3 October 2021
3,748,000
Interest income
81,000
Return on plan assets (excluding amounts included in net interest)
(416,000)
Benefits paid
(130,000)
Contributions by the employer
55,000
At 1 October 2022
3,338,000
2022
2021
Fair value of plan assets at the reporting period end
£
£
Equities
2,002,800
2,286,280
Diversified Growth Funds
567,460
637,160
Fixed interest
467,320
562,200
Property
166,900
149,920
Cash
133,520
112,440
3,338,000
3,748,000
The pension plan assets do not include ordinary shares issued by the sponsoring employer nor do they include property occupied by the sponsoring employer.
25
Retirement benefit schemes
In respect of the Thames Valley Eggs Limited Scheme the major assumptions used by the actuary for FRS 102 purposes were:
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
25
Retirement benefit schemes
(Continued)
- 34 -
2022
2021
Key assumptions
%
%
Discount rate
5.40
2.20
Expected rate of increase of pensions in payment
3.00/3.50
2.70/3.00
CPI inflation
3.50
2.70
Expected return on plan assets
2.20
1.70
Mortality assumptions
2022
2021
Assumed life expectations on retirement at age 65:
Years
Years
Retiring today
- Males
21.6
21.6
- Females
23.7
23.6
2022
2021
Amounts recognised in the profit and loss account
£
£
Net interest on defined benefit liability/(asset)
4,000
18,000
2022
2021
Amounts taken to other comprehensive income
£
£
Return on scheme assets excluding interest income
572,000
(609,000)
Actuarial changes related to obligations
(1,247,000)
(131,000)
Effect of changes in the amount of surplus that is not recoverable
644,000
-
Total costs/(income)
(31,000)
(740,000)
The amounts included in the balance sheet arising from the company's obligations in respect of defined benefit plans are as follows:
2022
2021
£
£
Present value of defined benefit obligations
4,038,000
5,468,000
Fair value of plan assets
(4,682,000)
(5,279,000)
(Surplus)/deficit in scheme
(644,000)
189,000
Restriction on scheme assets
644,000
-
Total liability recognised
-
189,000
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
25
Retirement benefit schemes
(Continued)
- 35 -
2022
Movements in the present value of defined benefit obligations
£
Liabilities at 3 October 2021
5,468,000
Benefits paid
(303,000)
Actuarial gains and losses
(1,247,000)
Interest cost
120,000
At 1 October 2022
4,038,000
The defined benefit obligations arise from plans which are wholly or partly funded.
2022
Movements in the fair value of plan assets
£
Fair value of assets at 3 October 2021
5,279,000
Interest income
116,000
Return on plan assets (excluding amounts included in net interest)
(572,000)
Benefits paid
(303,000)
Contributions by the employer
162,000
At 1 October 2022
4,682,000
2022
2021
Fair value of plan assets at the reporting period end
£
£
Equities
2,247,360
2,586,710
Diversified Growth Funds
795,940
844,640
Fixed interest
842,760
1,055,800
Property
608,660
527,900
Cash
187,280
263,950
4,682,000
5,279,000
The pension plan assets do not include ordinary shares issued by the sponsoring employer nor do they include property occupied by the sponsoring employer.
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 36 -
26
Financial commitments, guarantees and contingent liabilities
The company is party to a cross guarantee in favour of HSBC UK Bank plc. As part of the cross composite guarantee between the companies under common control, a mortgage debenture exists which provides HSBC UK Bank plc with charges over all company assets, as security against its exposure to debt. The total liability under this guarantee across these companies at 2 October 2021 was £8,151,926. On 12 October 2021 the total liability under this guarantee across these companies was limited to £1,400,000.
The company is party to a cross guarantee in favour of HSBC UK Bank plc. As part of the cross composite guarantee between the group companies, an unlimited multilateral guarantee exists which provides HSBC UK Bank plc with charges over all company assets, as security against its exposure to debt. The total liability under this guarantee across these companies is £2,769,879 (2021: £1,277,724).
The company is party to a cross guarantee in favour of HSBC Equipment Finance (UK) Limited in relation to the financing arrangements for various assets in group companies. The total liability under this guarantee across these companies is £820,655 (2021: £515,433).
27
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
1,419,407
1,580,762
Between two and five years
4,264,280
4,122,164
In over five years
6,341,360
6,324,067
12,025,047
12,026,993
28
Capital commitments
Amounts contracted for but not provided in the financial statements:
2022
2021
£
£
Acquisition of tangible fixed assets
322,345
232,277
STONEGATE FARMERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 1 OCTOBER 2022
- 37 -
29
Related party transactions
During the year the company made purchases of £1,182,624 (2021: £1,266,298) from the director and companies with a common director, sold assets for proceeds of £nil (2021: £185,000) to companies with a common director, and received management charge income of £299,719 (2021: £283,609) from companies with a common director.
At the year end a total of £647,534 (2021: £2,115,794) was due from companies with a common director, and a total of £333,604 (2021: £25,524) was due to companies with a common director.
In accordance with FRS102, Section 33 'Related Party Transactions', transactions with other group undertakings owned 100% within the group have not been disclosed in these financial statements.
30
Directors' transactions
During the year the company advanced £152,400 to the director. The director repaid £152,400, and interest of £967 was charged on the overdrawn balance at the official HMRC rate. At 1 October 2022 £10,771 was due to the director. The maximum amount owed to the company during the year was £116,229.
31
Ultimate controlling party
The immediate parent company is Stonegate Food Group Limited.
The largest and smallest group in which the results of the company are consolidated is that headed by Stonegate Food Group Limited, registered office Lacock Green, Corsham Road, Lacock, Chippenham, Wiltshire, SN15 2LZ. The consolidated financial statements of this group are available to the public and may be obtained from Companies House, Cardiff.
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